Directors Corner | December 2020 | If the Course Be Departed From

“Men’s courses will foreshadow certain ends, to which, if persevered in, they must lead,” said Scrooge. “But if the courses be departed from, the ends will change.”  –  Ebenezer Scrooge, A Christmas Carol, Charles Dickens

As it is with men, so it is with properly functioning marketplaces:  enlightened purchasers of a proactive nature can alter a given market’s course, and thus, the “foreshadowed ends” which will otherwise come about. Which is why, throughout 2020, we at CBGH sought to document and quantify “the course” of the healthcare marketplace:  so that we could suggest the “foreshadowed end” and that purchasers would then alter it.

In healthy, competitive, and properly functioning markets, prices and quality measures are both transparent.  And, if price isn’t directly related to a product’s quality, then it is typically a function of the producers’ costs.  But healthcare cannot in any sense be described as a “properly functioning” marketplace.   As we shared recently, a report from the Institute for Clinical and Economics Review (ICER) documented that seven of the nine drugs with the greatest price increases had no improvements in efficacy or other justification for the increase.  And when it comes to hospital services, the largest single line item for which purchasers spend limited dollars (dollars that should either be going to salaries or into operations), we documented that prices bear no relationship to either patient outcomes or the costs of delivering care.  THAT would seem to be the very definition of “marketplace dysfunction.”

The healthcare market in 2020 isn’t the same market it was in the 1970s, 1980s, or 1990s.   We should not be purchasing healthcare and providing benefits as if it were.   For that reason, we can think of no more important read prescribing what purchasers must do to change their foreshadowed course than “To Control Health Care Costs, US Employers Should Form Purchasing Alliances” by Dr. David, Blumenthal, Lovisa Gustafson, and Shawn Bishop of the Commonwealth Fund in the Harvard Business Review.   It perfectly explains why CBGH members voted to form The Colorado Purchasing Alliance.”

For a synopsis of four key reports to share with your leadership summarizing what we learned about Colorado’s market concentration, hospital pricing, premium increases, and more in 2020, click here for 2020 Health Care Markers and Trends.

Employers, Taft-Hartley plans, and employer trusts have the means to alter what’s foreshadowed for 2021 and beyond.  To do so they must depart their current course.